RBI Introduces New Guidelines For Identifying And Managing Wilful Defaulters

(i) Definition of wilful default:

A borrower is considered a wilful defaulter if they fail to meet payment obligations despite having the means to do so, divert or siphon off funds, or dispose of secured assets without lender approval. It also includes cases where the borrower or promoter does not fulfil commitments to infuse equity despite having the ability to do so. The threshold for classification as wilful default is INR 25 lakhs or more in outstanding amount.

Identification mechanism:

A structured process is mandated for identifying wilful defaulters, involving an identification committee and a review committee. The borrower or guarantor receives a show-cause notice and has 21 days to respond. A personal hearing is offered, but lawyers are not allowed in these proceedings. The review committee makes the final decision based on the recommendations and submissions.